Queensland Media Club Q&A

SUBJECTS: Defence industry; defence spending; AUKUS; Ghost Bat; PNG 50^th anniversary; China; PNG-NRL; drones and counter drones.

HOST: Thank you very much, Minister. Appreciate it. When I was talking to a few people today about this speech, one of the government policy makers told me that in defence industry politics is pertinent still. Do you agree with that, and can you distil some advice for businesses who may be in this room looking to get ahead with these billions of dollars in contracts the government is going to award over the next decade? 

MINISTER CONROY: Thanks for the question. I actually don’t think politics is pertinent in this area. I think that we are genuinely committed to choosing the best capability at the fastest possible speed within budget. So, I think we don’t have any time to waste. We’ve been very clear we’ve lost the 10-year warning horizon for a potential regional conflict, so speed and capability is essential. 

I’ll give you one recent example, which was the announcement a couple of weeks ago by the Deputy Prime Minister and I of the acquisition of the Mogami class frigates. We chose the fastest speed and capability possible that would give us best capability as well. So, I genuinely think that this has to be above politics. Like, that’s not to say that people won’t have criticisms, and that’s one of the important parts of living in a democracy. But they certainly don’t play into where we make decisions around locating our capability. We need to get on with the job, is my short answer. 

HOST: So, the fact the Defence Minister is from Victoria had no part in Geelong getting the Hanwha contract over Queensland and Rheinmetall? 

MINISTER CONROY: It’s a good question, and I can assure you that it played zero part. And the biggest proof for that is the fact that the Defence Minister and Deputy Prime Minister removed himself from the process completely because for the very fact that one of the two tenderers was based in his electorate. So, I was the sole defence decision-maker in that, and I took it to the National Security Committee of cabinet. Rheinmetall has got great capability. They’re producing reconnaissance vehicles right now for the Australian Army. And, as I said, we’ve just negotiated the largest defence export deal in the history of the nation to sell over 100 heavy weapon carriers to Germany. I’m looking forward to more to come. But politics doesn’t enter into those decisions. The people expect us to get the right capability for the Defence Force, and that’s what we’re doing. 

HOST: I’ll turn it over to the journalists.

JOURNALIST: Good afternoon, Minister Conroy. Thanks for being here. My name is Fraser Barton from Australian Associated Press. My first question is: the US Defence chief previously said this year that our nation should be upping the defence budget. I guess, is this, in fact, what you’re talking about today with drones and counter-drone operations as well as investment in North Queensland as a rebuff to that narrative? 

MINISTER CONROY: I think it’s – I wouldn’t say a rebuff; it’s stating what our policy is. We are committed to the largest increase in the defence budget in peace time history of this nation - $57 billion over the next 10 years, including, importantly, $10 billion – 10 and a half billion dollars in the next four years. That will lift our defence expenditure considerably, but we’re accelerating capabilities very rapidly, too. The precision strike missile, which I gave you as an example in my speech, we’ve brought forward by two years. We’re bringing forward construction of the infantry fighting vehicles, landing craft, frigates. So, to give you another example, under the previous government’s plan, we would have received our first new warship in 2034. Instead under our plan that’s funded by our budget increase, we’ll receive four warships by 2034 including the first one delivered in 2029, in service by 2030. So, we are lifting the defence budget considerably. We know there’s a conversation going on around the world about how countries are considering their budgets. And we’re up for that conversation, but we are increasing the budget very considerably. 

HOST: Just on that, following Fraser’s question, as you mentioned, there’s an AUKUS review going on and it seems like Elbridge Colby is trying to extract as many concessions – sorry, the US is trying to extract as many concessions from Australia as possible. Is it inevitable that our defence spending will reach maybe not 5 per cent but a couple of percentage points higher than what it’s at now? 

MINISTER CONROY: Well, I think we should see what the review comes up with, to be honest. It’s perfectly natural that the new Trump administration wants to review AUKUS. I understand it. We did exactly the same thing when we came to power through the Defence Strategic Review. And the UK and Labor Government when they won their election through the review. So, we’ll just see where the review lands. We’re engaging with it at the appropriate levels, including through our counterparts. 

But there’s a conversation going on around the world about where the strategic situation is. But we are increasing the defence budget, and as the Prime Minister said during the election campaign and subsequently since, if the Australian Defence Force and the Department of Defence and myself and the Deputy Prime Minister make a case for a specific capability, we’ll get it, and that sounds odd. We’ll make decisions based on whatever capabilities we need and then fund it rather than plucking a figure out of the air. We just don’t think that’s the right way to do policymaking in defence. 

And as he also said, if someone came into the ERC and said, “I want to spend 3 per cent on health,” but wasn’t able to tell us on what, they wouldn’t last long in ERC. So, we’re going to do this in a proper, reasoned, commonsense way. 

JOURNALIST: Minister. One of the things you mentioned was the Ghost Bat and you seemed quite excited about the Ghost Bat and its operations. But a keyword you used was “if”, if it progresses past production, I guess. When will the taxpayers, when will Australians, know whether it will go past that next stage? And what warrants it going into that full production stage? 

MINISTER CONROY: Well, the exercises going on right now will determine whether it goes to the next stage. We’ll make that decision towards the end of this year, perhaps early next year, on whether we’ll commit to full rate production. We’ve invested over a billion dollars in the Ghost Bat. Boeing’s put their own skin in the game as well, and I recognise Boeing here as well. And we were always clear when I made the funding announcement, which was from memory at the start of last year, for another $400 million to acquire three of the – batch 2 of Ghost Bat is that we would have the technology capability phase in 2025, we’ll evaluate those results and make a decision about whether we’d go into full rate production. So those exercises that are going on rate now are critical to that. Successfully firing a missile from Ghost Bat will inform our decision as well. 

Importantly, we’re investing in the collaborative combat of architecture so that our aircraft cannot only – Ghost Bat cannot only talk to our crew aircraft, but they can be linked into a network of aircraft with countries like the United States. So, we’re keen to progress it. 

We’re also keen to get exports in this market. As I said, it’s the first aircraft designed and built in this country for 50 years. It’s something that our allies and partners are interested in. And it’s one of the first campaigns of our new Defence Strategic Sales Office that we announced on literally the day the election was called. And that’s about selling Australian products and Australian industry to the world that not only helps our allies and partners, it helps create jobs in Australia. It helps defray the cost of building and maintaining these platforms across bigger fleets. So, we’ve got a bit to do before we make that decision. But we’re very excited by the prospect and, importantly, the Air Force is very excited by the prospect. 

ANDREW MESSENGER: Minister, my name’s Andrew Messenger from The Guardian Australia. I have a question about your other ministry, Minister for Pacific Island Affairs, but it also fits in with Defence as well. As you pointed out in your speech, you pointed out six priorities that the National Defence Strategy is doing deals and developing those deals in the Indo-Pacific. Next month you’re signing a defence treaty with PNG, which is the day before independence 50 years ago. PNG and Australia have always had a close relationship. Obviously 50 years ago. And including the area of security. So why is it necessary to have a defence treaty with PNG? 

MINISTER CONROY: Well, you’re very right to point out the very close connections that we’ve got. Those connections have gotten richer in the last three years. On behalf of the government, I successfully negotiated a bilateral security agreement with PNG in 2023 that had a very broad focus. It perceived of security in a very holistic approach and not just invasion, military aggression but also natural disasters, pandemics, civil unrest, domestic violence, cyber. And that BSA is a really important framework agreement that allowed us to create space and strategic understanding to negotiate other arrangements, including the landmark $600 million National Rugby League deal that I’m very, very excited about. 

The defence treaty that will be signed in the not-too-distant future will build on that. I’m not going to go into the details of that because I don’t want to steal the thunder from the two Prime Ministers. I enjoy my job, and I want to keep it! But all I can say is you’ll be very excited to read what’s in it. It will elevate Australia’s relationship with Papua New Guinea to an even higher level. And I know politicians hyping up things is always dangerous, but I really believe that when you see the text of the treaty you’ll understand why we’re so excited about it. And I was with the Papua New Guinean Deputy Prime Minister John Rosso are having a coffee this morning and we’re both excited about the deeper linkages we have. PNG is our closest neighbour. It’s our only colony ever. It is only 4 kilometres away from Australia. You could swim there if you weren’t worried about crocodiles – and you should be. Our security and prosperity is entwined with their security and prosperity, and the defence treaty will take that to an even higher level. 

HOST: Do you think, Minister, when it comes to the Pacific and obviously China’s pushing its power through the region. Do you feel like Australia is playing a whack-a-mole game with China? Because every time we seem to solve a problem with the Pacific another one pops up. And I’ll talk about the Cook Islands as an example with China doing a security deal with them. 

MINISTER CONROY: I think whack-a-mole is a good concept for what we’re trying to avoid. We made it very clear that a vacuum was created when governments retreated from the region, and that vacuum was filled by other countries – most notably China. And we’ve been very clear, both Penny Wong and I, about we’re in a permanent state of contest for influence in the region. And we’re committed and we’re fighting every day to be the partner of choice for the Pacific. And we do that because our security and prosperity is linked to theirs. Like, you can’t underestimate that. People in Queensland understand because you’re closer to the Pacific than other parts of Australia. We need to be their partner of choice. And that’s why we’ve committed to deepening those relationships so they are transactional, so we don’t do whack-a-mole and we elevate the relationships so that they’re so deep and meaningful and value driven from both countries that it’s not worth looking elsewhere. 

And obviously the PNG is one example through the BSA and the rugby league deal. Just think about that for a moment. I was speaking to a rugby league state is something we do have in common. We’re using rugby league as a tool of soft power diplomacy to bring our two countries closer together. That is phenomenally exciting from my point of view. But it’s not just the rugby league deal with PNG; it’s the Falepili Union with Tuvalu where we’ve guaranteed to come to their assistance in the event of military invasion, world health pandemic or a natural disaster where we’re helping reclaim land so that they can resist climate change. But importantly, we’re also granting permanent residency to an entire nation in a stage-managed, steady way. That’s responding to their needs. And obviously as part of that treaty we’re their security partner of choice. With Nauru, we signed a Nauru-Australia treaty that’s all about their economic resilience and giving each other security guarantees. 

So, they’re three examples. The defence treaty will be another example. Last week I initialled a document on the side of a volcano – which was a first for me – with the Deputy Prime Minister and the Foreign Minister around the Nakamal treaty with Vanuatu. These are about avoiding what you’ve alluded to and having deep, enduring relationships where we demonstrate that partnering with Australia brings the best benefits for the people of the Pacific. I’m really sorry for the long answer, but it’s something that I’m really passionate about. 

LEXY HAMILTON-SMITH: That was a very long answer, Minister. Lexy Hamilton-Smith from the ABC. Thanks for taking our questions. I just want to follow up on Nauru. Just last week they did sign a billion-dollar deal with a Chinese company that most of us I’m told have not heard of called the China Rural Revitalisation and Development Corp, looking at things like renewable energy, phosphate industry, marine fisheries, ecotourism, a bit of a whack-a-mole hit there I would have thought. What are your concerns about that, and does it trigger any obligations to Nauru under the treaty that we have with them? 

MINISTER CONROY: Defence is engaging with the government of Nauru on whether it aggravates parts of our treaty with Nauru, particularly article five of the treaty. That is a really important treaty for us that helps position us as a security partner of choice with Nauru. 

But I want to be really clear about something: we’re not opposed – in fact, we call on every country in the world to be an economic partner and a develop partner with the Pacific. Like, we think other countries should be doing their fair share and investing in the Pacific. That’s a good thing for the region. What we’ve been very clear is that every country in the world should respect the views of the Pacific Island Forum, the leader's consensus, which is that security should be guided by countries within the PIF. That is what we’re focused on – implementing the views of Pacific Island leaders and the consensus around the PIF that security should be provided by countries in the Pacific for the Pacific. 

But economic development is a good thing. What we’ve also called for is transparency, listening to the priorities of the Pacific and acting on their priorities, investing in high-quality infrastructure and maximising local content. Like, I made a speech today to the Pacific Infrastructure Conference which is happening downstairs in this convention centre. I highlighted and said very clearly that for all other development partners in the Pacific they should be ensuring that they spend as much – that local content needs to be prioritised. I just announced an $11 million roads partnership with the Solomon Islands government where every dollar is going to a Solomon Islands company and Solomon Islands workers. I challenge every other development partner in the Pacific, if you’re serious about partnering with the Pacific, a true test is whether you use local labour and local companies so that Pacific Island counts get the double economic dividend of the local work. That’s the test that every development partner should be trying to pass. And if they aren’t, then serious questions should be asked about their commitment to the region. 

JOURNALIST: Minister, Andrew again from The Guardian. Will – I realise you sort of said you wouldn’t give this answer, but I’ll ask you anyway. Will one of the preconditions with the treaty with PNG be that they can’t do anything to any defence or security arrangements with China, which is similar to the deal with PNG NRL team? 

MINISTER CONROY: Well, what I say to that is that we have a shared strategic understanding that was grounded in the bilateral security agreement. And Prime Minister Marape, Foreign Minister Tkahchenko, Deputy Prime Minister Rosso have made very clear statements that they are – intend to stick with their traditional security partners – principally Australia. Prime Minister Marape has said that on many, many occasions. That’s the strategic understanding that drives all our engagement with PNG, whether it’s the BSA, the rugby league deal or the defence treaty. So, I think you can understand what I’m saying there. 

JOURNALIST: Sorry, just catching up. Fraser from AAP, Minister, you mentioned the Pacific Island Forum next month in Honiara. Do you think China’s overplayed its China in trying to influence Taiwan attending the forum? And how will you ensure China will not play any role in the PIF given the declaration of development partners from the Solomons PM? 

MINISTER CONROY: Well, I’ll leave the commentary to the commentators about whether certain countries have overplayed their hands. What I can say to you is that we think it’s unfortunate that that decision has been made by the Solomon Islands government. We think that every dialogue partner should have been invited to the PIF and be able to participate, whether that’s China, Taiwan, United States, United Kingdom – whoever, you name it. We think that the 1992 status quo consensus around dialogue partner engagement should be maintained. But we’re not there. So, we’ve just got to get on with doing it. 

It's really important that everyone in the world engages with the PIF and the Pacific Islands in a respectful manner that acts on the priorities of the Pacific Island leaders and acts on the views of the Pacific through the PIF 2015 statement. So, there’s some guiding principles we have. 

HOST: Just on that, Minister, I’d like to ask about Taiwan. I know it’s not specifically your portfolio, but experts say that the best way to secure Taiwan is to provide deterrence to China. Why is Australia so ambivalent when it comes to sharing whether we would defend Taiwan in the event of a Chinese invasion – or any invasion? 

MINISTER CONROY: Well, I’ll make a couple of points. One, ministers rarely talk about hypotheticals. It’s just not a business you want to get into as a minister. Secondly, the policy announced there is effectively a policy of most countries who are supporting the status quo. For example, the US, the United States, has had a long running policy of strategic ambiguity. I’m not aware of any country in the world that has overtly stated that they will do X in the event of a forceful attempt to take over. Like, the only person I’ve ever heard mention it is Angus Taylor. And I think Angus wrote it back within 24 hours because it was clear that Angus was doing Angus and speaking through his hat. 

So, the US have made it very clear that strategic ambiguity is their policy. We’ve made it very clear that we support the status quo. And there should be no change to the status quo by force, and that’s our policy. 

HOST: Are you frustrated that the US is calling for Australia to provide that clarity? 

MINISTER CONROY: I think there’s been a lot of media speculation that that’s occurred. But I’ve also seen commentary in the media that that’s not what they asked for. All I can say to you is that the United States understands our position, as we understand the position – their position of strategic ambiguity. 

LEXY HAMILTON-SMITH: Minister, Lexy again, ABC. Just on behalf of Stephen Dziedzic, so from Canberra, just back to the drone technology, you’ve mentioned the use of drones in Ukraine and some of the incredible wins that they’ve had. But I understand you have some concerns about what the positives and negative are in relation to using similar technology in Australia. Can you just expand that a little bit further? 

MINISTER CONROY: Well, I think drones are here to stay. Drones are a critical part of modern warfare, and that’s why we’re investing over $10 billion in drone and counter-drone technology and autonomous systems. What I’m hesitant about is people drawing too many direct lessons from the Ukraine to Australia. We’re obviously deeply interested in the lessons from the Ukraine conflict and drawing them out. But I do get frustrated by commentators who think that everything that’s occurring in the Ukraine conflict is correctly applicable to Australia and the Australian environmental surrounds. You’re talking about a really dense conflict that’s occurring in the European land mass in a very relatively discrete area of the world in terms of geographical space. To apply the same lessons to the Indo-Pacific region I think is probably a bridge too far. So, I’m just urging caution about directly applying lessons. 

And anyone who says because they’re an expert on the Ukraine conflict makes them an expert on Indo-Pacific conflict I think you should take it with a grain of salt. But we’re investing massively and at speed in drone technology and, importantly, counter-drone technology. That’s obviously one of the topics of my speech today. 

JOURNALIST: Minister, another one from Canberra: are you able to outline where negotiations are with the bilateral agreement with Kiribati at the moment? 

MINISTER CONROY: With Kiribati? Well, we’re engaging with all Pacific Island nations on their interests, and we made it very clear that we’re open to doing deals, negotiating beneficial arrangements for any Pacific nation interested in talking to us. It’s probably not appropriate to get into more detail on Kiribati at this stage at an open forum like this. 

HOST: I want to go to what you said before, Minister, around - there needs be to more work done to put SMEs, to make sure they’re part of the equation. What specifically needs to be done, and what are you doing to ensure that’s the case? 

MINISTER CONROY: We’re doing a few things. Well, let me start on the negative side – where has defence let down SMEs and where we need to do more. We need to be faster at getting into contracts. In most instances contracts take too long. Secondly, we need to simplify contracts, and we’re doing that right now by simplifying what’s called the SME suite of templates. We need to get defence taking on more risk, and we need to work with defence primes about does every single requirement of a contract we enter into with a prime have to flow down to their supply chain, because, in the end, what ends up happening is asking mum and dad operations to put their house on the line to win a tiny bit of work with a prime. So, we’re interested in doing more there and building the capability with defence. 

Good things that we’re doing is we’re trying innovative contract methods. So, what we do with the LAND 156 is light speed compared to traditional defence contracting, and doing rolling waves of contracts so that we don’t set and forget, we learn from the iPhone era where it’s about upgrading technology. We’re also doing more direct contracting with SMEs so that we bypass primes where it makes sense. We’re also investing more in open architecture. So even where we do have one system integrator, we don’t get locked into their proprietary technology so that we can have an innovative SME bringing capability to an open architecture system. 

And then a really basic system that I was amazed the last government didn’t do – or two things: one, we had Australian industry capability requirements where if a company wins a contract, part of their bid is I will do X amount of work in Australia. Under the last government that wasn’t contractually enforceable. So you could have companies saying I’ll do 70 per cent in Australia, but then it wasn’t enforced. Then, secondly, the only measurement of that was does the company have an ABN in this country. So that’s led to the infamous French lessons and the catering and everything under the submarine contract. 

So, we’ve developed a methodology to look through the ABN so that we’re satisfied that when a company says we’re going to engage Aussie SMEs, they’re actually going to engage Aussie SMEs and do that work in Australia. 

HOST: I mentioned at the start that you were the longest serving Defence Minister since the 1970s. Do you want to step up and be Defence Minister? 

MINISTER CONROY: I love the job that I’m doing right now. And I think we’ve got a really good team. I know I’m talking about myself, so that’s always dangerous. But I think we’ve got a really good team with Richard Marles and myself. And want to make a broader point about continuity. At the end of this – sorry, first off, Richard Marles and I asked the PM to be re-appointed to our portfolios. That’s a sign of how much we enjoy the jobs and how we enjoy working with each other. By the end of this term Richard Marles will be the longest running Defence Minister since Jim Killen in the late 70s. I’ll be the longest running defence industry or defence supply minister since 1950. Like, under the last government goldfish lasted longer than defence ministers. And you need that continuity to get change and to be fair, under the last Labor Government the average defence minister lasted two years. 

That change means that we’ll be turning over defence leadership, we’ll be leading the defence reform process so that we get real cultural change with defence and partner with industry. So that’s a very long-winded answer to your question, which is I love my job. I think I’ve got one of the most enjoyable jobs in government, and I intend to keep it. 

HOST: Very diplomatic. Please join me in thanking the minister for sharing with us today. And a deep thank you, too, to our naming rights partners Virgin Australia Group, Brisbane Airport and Griffith University, as well as our other partners. As always, the QR code is on the back of your menus, and it has more information on our upcoming events. Thanks so much.

ENDS